Friday, January 9, 2015

U.S., China And Lower Crude Prices Will Fuel General Motors' Growth

General Motors(NYSE:GM), the second largest automaker in terms of sales volume,
has been dealing with the problems related to faulty ignition switches.

So far, the companyhas receivedmore than 2,300 ignition switch
related claims. The company's lawyer has confirmed that 42 death and 56 injury
claims are eligible for payment, nearly 300 have been rejected while the
remaining are being studied.

The company, however, maintains that a majority of the claims
are related to the old-GM, before the company filed for bankruptcy and was
bailed out by the U.S. government. Nonetheless, the lawsuit continues to weigh
on the company's stock. GM expectsto pay between$400 million and $600 million as compensation.

The
uncertainties regarding the lawsuit continue to weigh on GM's stock. The
extraordinary number of 78 recalls this year of more than 30 million vehicles
has also not helped.

Meanwhile, the company hasbeen strugglingin Europe, with car registrations
falling by nearly 12% in November from last year's November. Overall,
registration for GM vehicles have fallen by 4.2% in the first eleven months,
despite 7.9% higher registrations from Opel and Vauxhall brands which was
offset by lower registration for Chevrolet and other brands.

This was particularly disappointing considering that nearly all
of the other players, from its European competitorVolkswagen(OTCQX:VLKAY)
to its homegrown rivalFord(NYSE:F) to Japan'sToyota(NYSE:TM), witnessed an increase in car registrations in the EU in
the first eleven months of this year.

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